TechApr 24, 2025
Google Parent Alphabet Delivers In First Quarter 2025 Earnings, But Clouds Loom Over Business This Year
Regulatory Headwinds
Noah Weidner
Discover
Big Tech firms were instrumental to the 2023-24 stock market rally — but can they be the most important ingredient in a 2025 comeback? Absolutely. Earlier this month, the tech-heavy Nasdaq 100 was down 18% on the year. But weeks later, the index is racing back — and that’s even before most Big Tech companies have reported their results, adding their thoughts to a mound of commentary about the economic environment.
Living up to expectations: Some on Wall Street had worried that Google parent Alphabet had a lot to prove as it kicked off earnings on Wednesday. Going into its first-quarter earnings, Alphabet was the cheapest of the Mag7 stocks, trading at 18.7x. It had also faced downgrades amid worries about growth or competitive pressures from AI, which have been being evaluated by antitrust regulators. But when push came to shove, the Silicon Valley heavyweight brought out the big guns.
The firm’s strong showing and growing margin emboldened it to raise its year-old dividend by 5% (to $0.21) and announce a $70B buyback (which we covered yesterday). That move pushed Alphabet up over 7% on Wednesday. Still, the stock sits down 16% YTD — and things are unlikely to improve quickly, as Google is fighting demons on both competitive, economic, and political fronts.
Light at the end of the tunnel: Part of Alphabet’s discount valuation is the great uncertainty playing out across its business. Despite touting over 350M monthly users on its AI model, Gemini, the company is struggling to translate that to economic success. At the same time, it’s likely to face softening demand from advertisers — and the determination of a judge who could order the tech giant to sell off or reorganize its core businesses like ads, Android, or Chrome. AI competitors Perplexity and OpenAI have even said they’d be willing bidders on the search engine — because that totally solves the whole monopoly problem.
